The Constitutional Convention of 1787 was held in strict secrecy. Consequently, anxious citizens gathered outside Independence Hall when the proceedings ended in order to learn what had been produced behind closed doors. The answer was provided immediately. A Mrs. Powel of Philadelphia asked Benjamin Franklin, "Well, Doctor, what have we got, a republic or a monarchy?" With no hesitation whatsoever, Franklin responded, "A republic, if you can keep it." ~ BENJAMIN FRANKLIN 1787

Saturday, October 29, 2011

Republicans running for the White House are starting to rack up endorsements from GOP members on Capitol Hill. In 2008, Mitt Romney secured the most congressional endorsements in the GOP primary, but Sen. John McCain (R-Ariz.) subsequently won the nomination. This time around, legislators are taking a more cautious approach. The list below reflects publicly committed backers of 2012 presidential hopefuls.

LAST UPDATED ON Oct. 18 at 2:49 p.m.

NOTE -- Endorsements in 2008 only noted if the member was serving in Congress at that time.

Thursday, October 27, 2011

Obama's Student-Loan Order Saves the Average Grad Less Than $10 a Month

OCT 26 2011, 12:53 PM ET

The monthly impact of the president's new effort for most Americans paying off college debt will be between $4 and $8

Of the many long-term problems the U.S. economy faces, student loans are a big one. Education costs are rising very quickly and incomes aren't. As a result, students will have to borrow more and more money to obtain university degrees and will have a tougher time paying their loans. President Obama seeks to respond to this question with an executive order in the next part of his "We Can't Wait" unilateral stimulus effort. While the president's heart may be in the right place, his effort isn't like to have much impact.

The Problem: Student Loans' Crazy Growth

The cost of college is growing rapidly. That wouldn't be a problem if incomes were growing as quickly as tuition and fees. They aren't. In order to cope with the growing expense of college, more students are relying on bigger loans. The chart below demonstrates the problem pretty clearly:

You can see that student loans have grown by 511% since 1999. Meanwhile, disposable income has grown by just 73%. As this chart also shows, most outstanding student loan debt (82%!) was accrued by students over just the past decade.

Obama's Executive Orders

The president seeks to make the situation a little bit easier for some of those graduates. He will create an executive order that has three components.He will clear the way for borrowers with direct government loans and government-backed private loans to consolidate their balances. The White House estimates that this will cut the effective interest rate on student loans by up to 0.5%.

it will limit the amount of student loan payments to 10% of a graduate's income. (Currently, the limit is 15%.) and,

it will allow debt still outstanding after 20 years to be forgiven. (Currently, forgiveness occurs after 25 years.)

Those last two orders are really just the president moving up the timeline of existing legislation. Both changes are set to go into effect in 2014, but the president will order that they go into effect as of 2012.

The Impact

Let's consider the impact of each of these orders.

Consolidation

The first would clearly be the most significant, because it is aimed at helping more student loan borrowers. How much would an interest rate reduction of up to 0.5% affect payments?

For the average borrower, the impact would be small. In 2011, Bachelor's degree recipients graduating with debt had an average balance of $27,204, according to an analysis done byfinaid.org, based on Department of Education data. That average has ballooned from just $17,646 over the past decade.

Using these values as the high and low bounds of average student debt over the last ten years, the monthly savings for the average student loan borrower would be between $4.50 and $7.75 per month. Clearly, this isn't going to save the economy. While borrowers with bigger balances would save more, this is the average. And even someone with $100,000 in loans would only cut their monthly payments by $28.50.

Payment Limits

As mentioned, the government already has a program for borrowers to reduce their student loan payments to a ceiling of 15% of their income. At this time, just 450,000 borrowers are participating. Clearly, all of those participants would benefit from lowering the max payment to 10%. But how many others would?*

Student loan balances have really only ballooned over the past decade. So this change would affect very few Americans over the age of 32. For the young adults who it may effect, we must remember that educational attainment has some correlation to income. Those with the most debt will have attended business school, medical school, or law school.Most of those people will also have higher incomes, making them ineligible. (well what did you expect!) For a person with the average student debt load, their annual income would need to be lower than $32,000** to qualify. The average income for Bachelor's degree holders aged 25 to 34 is $40,100.

Loan Forgiveness

Of all these parts of Obama's executive order, the loan forgiveness aspect will have the least impact. By moving the timeline from 25 to 20 years, it could be significant in the long run -- but it won't be felt for decades. Remember, 82% of the current student loan debt outstanding was accrued in just the past decade. So it will be at least another 10 years before any of those borrowers have hit the 20-year mark in their student loan payments.

Can an Executive Order Really Do This?

Some opponents of excessive executive power may question whether an executive order can really even accomplish these ends. The president is ordering a policy change for loan consolidation and changing the implementation date for previously passed legislation. Either of these actions could make for a really interesting court challenge, as both appear to stretch the limits of what an executive order was designed to do -- shouldn't Congress order such changes?

In practice, however, the orders will probably go through without challenge. First, it isn't clear that anyone who has standing to bring such a case to court would do so. The first measures may cost some private lenders some interest revenue, but they need to keep a conciliatory relationship with the government. The latter two measures would cost taxpayers. And even if such a challenge was brought, it could take the court a year or two to provide a final verdict. By then, unless a judge grants a temporary injunction, consolidation would already have occurred for most interested borrowers and the legislation's stated implementation date would already be past for the latter two aspects of Obama's effort.

By calling for these measures, President Obama seeks to respond directly to young Americans stressed about their student loans. Indeed, one of the vague objectives of the Occupy Wall Street movement is for student debt forgiveness. But from a practical standpoint, these executive orders won't have much of an impact. To take on the student debt problem more aggressively, the president would need some actual legislation that would shake the fundamental framework of the student loan system.---*Note: White House estimates that this provision could reach 1.6 million borrowers. That's considerably more than 450,000, but the provision still aims assistance to a select group struggling the most with their student loans. For those borrowers, the savings could be more significant than the consolidation savings. **Note 2: Initially, I calculated this to be $25,000. But I refined my analysis and a better estimate would be closer to $32,000. Again, the program still won't help the average borrower, but those will relatively low incomes and relatively high student loan debt could benefit.

Wednesday, October 26, 2011

A Nevada judge on Wednesday gave ACORN, the defunct grass-roots community organization, the maximum fine for its illegal voter-registration scheme in that state.

District Court Judge Donald Mosley was blunt and unsparing in his criticism of the discredited activist group. Citing the long history of voter registration fraud allegations that engulfed ACORN across the country, he slapped the group with a $5,000 fine for violating Nevada election law during the 2008 presidential election.

Mosley, reading the pre-sentence report, listed a series of voter registration fraud allegations against ACORN workers. He said that if the claims have been true, then "It is making a mockery of our election process. If I had an individual in this courtroom...who was responsible for this kind of thing, I would put that person in prison for 10 years, hard time, and not think twice about it," he said. "To me this is reprehensible. This is the kind of thing you see in some banana republic, Uruguay or someplace, not in the United States."

In Nevada, ACORN pleaded guilty to one felony count of unlawful compensation for registration of voters, stemming from an illegal voter registration scheme in its Las Vegas office during in the 2008 race.

The group paid a bonus to workers to sign up 21 or more voters per shift, calling the program "21," or "Blackjack."

It is illegal in Nevada to pay bonuses to register voters.

The case was the first and so far only prosecution of ACORN itself. The previous ACORN cases that made headlines nationwide, included numerous convictions of ACORN employees for voter registration fraud.

Allegations ranged from trying to register dead people and making up fictitious voters, to plucking names out of the phone book. "This is not a voter registration fraud case, it is an improper compensation case," countered Lisa Rasmussen, the ACORN attorney, who argued that the fine should only be $1,000.

She told the court that "ACORN registered some tens of thousands of people to vote in the 2008 election, who would not have otherwise registered or voted."

She claimed that the Las Vegas bonus program was "not something that was implemented with the permission of ACORN's corporate management."

ACORN's Nevada field director, Christopher Edwards, had previously pleaded guilty, cooperated with prosecutors, and testified against the organization in court.

In November, ACORN'S regional director, Amy Busefink, who also worked for the nationwide group Project Vote, pleaded no contest to charges and was also sentenced to probation.

"The message out there is that we are not just going to look the other way, when we see these type of violations. We are going to aggressively pursue them, and I think that will deter people from engaging in that type of activity."

Court papers claim that ACORN is essentially out of business. Its lawyer, Arthur Schwartz, claimed that as of April of last year, it has no more employees, maintained only "one small office in New York," and "had real assets of less than $4,000," and "liabilities of more than $4 million."

"ACORN does not exist," Schwartz simply claimed.

But critics like Matthew Vadum, author of the new book about the group, Subversion, Inc., warn that "this is not the end of ACORN." "ACORN state chapters have been reorganizing under assumed names," says Vadum, noting that new groups have popped up in former ACORN offices.

He predicts that former ACORN workers will be back on the streets conducting voter registration efforts for the 2012 presidential election.

"I expect ACORN will run voter drives under the new front groups ... I have no doubt that this new election season will spawn new charges."

After the sentencing, ACORN's attorney denied that the group tried to subvert the electoral process and said that she is not aware of any plans for ACORN to reorganize in time for the 2012 elections.

In an interview with Fox News, Rasmussen said: "They were not convicted of submitting false voting registration petitions. They were not convicted of voter registration fraud."

She said she does not think the conviction "has any impact on the voter registration process."

But prosecutor Patrick Ferguson, senior Nevada deputy attorney general, told Fox News that: "The practices that occurred in this case will have the effect of subverting the election process, and that is why we have these laws on the books, to make sure that these practices don't lead to voter fraud."

He called the $5,000 fine "an appropriate sentence," and said that "It sends the message to know and follow our voter registration laws and our election laws here in the state of Nevada."

To hear President Barack Obama describe the withdrawal of U.S. troops from Iraq, you'd think it was a long-anticipated political victory, the fruition of a promise he made when campaigning for the White House. But his announcement last week that American troops in Iraq will return by the end of the year is a result of a serious Obama Administration failure that will undermine U.S. security interests in the Middle East.

Speaking on Friday from the West Wing, President Obama wasted no time in reminding the American people that, "As a candidate for President, I pledged to bring the war in Iraq to a responsible end," and that as commander in chief, he was making good on that promise in time for the holidays. What the President didn't mention, though, was the story behind the headline--that the Administration tried and failed to negotiate with the Iraqi government to extend the U.S. troop presence there in order to ensure the country's security and stability. The sticking point for the negotiations was immunity for U.S. troops in Iraq. Heritage's James Phillips explains:

Up until Friday, the Obama Administration had insisted that negotiations were on track for extending the presence of a small residual force that U.S. and Iraqi military leaders agreed were necessary to support Iraqi operations in key areas such as counterterrorism, air support, intelligence gathering, logistics, and training. But Friday, in a hard-hitting article posted on The Cableblog, Josh Rogin reported that the Administration had bungled the negotiations.

Those negotiations stalled, Phillips writes, because Iraqi political leaders didn't want to risk the political consequences of extending immunity for U.S. troops. And given the Obama Administration's eagerness to withdraw from Iraq and unwillingness to confront Iran they didn't want to put their political necks on the line. Now, as a result, U.S. security interests will suffer--bilateral U.S.–Iraqi cooperation in fighting al-Qaeda in Iraq and radical pro-Iranian Shia militias will be limited, and the ability to contain Iran will be weakened. Senator John McCain (R-AZ) criticized the Administration on Sunday, calling the withdrawal decisions "a serious mistake," and faulted the White House for its failure to negotiate with the Iraqi government:

There was never really serious negotiations between the administration and the Iraqis. I believe we could have negotiated an agreement. And I'm very, very concerned about increased Iranian influence in Iraq.

In the wake of its decision, the Obama Administration is already anticipating the consequences of the power vacuum it has created. In a series of interviews on Sunday, Secretary of State Hillary Clinton warned Iran that even though troops will be withdrawn, the U.S. will still maintain a presence in the region. "Iran would be badly miscalculating if they did not look at the entire region and all of our presence in many countries in the region, both in bases, in training, with NATO allies, like Turkey."

The reality, though, is that the United States has weakened its presence at a time when the region can least afford it. And withdrawing U.S. troops is a stronger statement than any words that can be broadcast on Sunday morning talk shows. Heritage's James Carafano explains that the White House's decision is the mark of an Administration in retreat--and why this retreat is incredibly dangerous:

With Syria in turmoil, Iran on the march, a more isolated Israel, and Turkey’s ever-more ambivalent policies, now is the worst time to see a diminished U.S. influence in ensuring continued progress in Iraq. A total troop pullout will leave Iraqi security forces much more vulnerable to terrorism, sectarian conflict, and Iranian meddling, and it will leave them much less capable of battling al-Qaeda in Iraq and pro-Iranian Shia militias.

No American wants to see U.S. troops stationed in the Middle East and placed in harm's way longer than they have to be. But unfortunately, their premature withdrawal from Iraq could jeopardize the progress that so many American men and women fought and died for. While the President now has a new talking point for the campaign trail, it comes at the expense of national security interests. And it is the Obama Administration's policies and bungled negotiations that are to blame.

Daily Update

Release Date: October 25, 2011

The weekly release is posted on Monday. Daily updates of the weekly release are posted Tuesday through Friday on this site. If Monday is a holiday, the weekly release will be posted on Tuesday after the holiday and the daily update will not be posted on that Tuesday.

Footnotes

1. The daily effective federal funds rate is a weighted average of rates
on brokered trades.2. Weekly figures are averages of 7 calendar days ending on Wednesday
of the current week; monthly figures include each calendar day in the
month.3. Annualized using a 360-day year or bank interest.4. On a discount basis.5. Interest rates interpolated from data on certain commercial paper trades settled by The
Depository Trust Company. The trades represent sales of commercial paper by dealers
or direct issuers to investors (that is, the offer side). The 1-, 2-, and 3-month rates are
equivalent to the 30-, 60-, and 90-day dates reported on the Board's Commercial Paper
Web page (www.federalreserve.gov/releases/cp/).6. Financial paper that is insured by the FDIC's Temporary Liquidity Guarantee Program
is not excluded from relevant indexes, nor is any financial or nonfinancial commercial
paper that may be directly or indirectly affected by one or more of the Federal Reserve's
liquidity facilities. Thus the rates published after September 19, 2008, likely reflect the direct or indirect effects of the new temporary programs and, accordingly, likely are not comparable for some purposes to rates published prior to that period.7. An average of dealer bid rates on nationally traded certificates of deposit.8. Source: Bloomberg and CTRB ICAP Fixed Income & Money Market Products.9. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.S.-chartered commercial banks. Prime is one of several base rates used by banks to price short-term business loans.10. The rate charged for discounts made and advances extended under the Federal Reserve's primary credit discount window program, which became effective January 9, 2003. This rate replaces that for adjustment credit, which was discontinued after January 8, 2003. For further information, seewww.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The
rate reported is that for the Federal Reserve Bank of New York. Historical series for
the rate on adjustment credit as well as the rate on primary credit are available at www.federalreserve.gov/releases/h15/data.htm.11. Yields on actively traded non-inflation-indexed issues adjusted to constant maturities. The 30-year Treasury constant maturity series was discontinued on February 18, 2002, and reintroduced on February 9, 2006. From February 18, 2002, to February 9, 2006,
the U.S. Treasury published a factor for adjusting the daily nominal 20-year constant maturity in order to estimate a 30-year nominal rate. The historical adjustment factor
can be found at www.treasury.gov/resource-center/data-chart-center/interest-rates/. Source: U.S. Treasury.12. Yields on Treasury inflation protected securities (TIPS) adjusted to constant maturities. Source: U.S. Treasury. Additional information on both nominal and
inflation-indexed yields may be found atwww.treasury.gov/resource-center/data-chart-center/interest-rates/.13. Based on the unweighted average bid yields for all TIPS with remaining terms
to maturity of more than 10 years.14. International Swaps and Derivatives Association (ISDA®) mid-market par swap
rates. Rates are for a Fixed Rate Payer in return for receiving three month LIBOR,
and are based on rates collected at 11:00 a.m. Eastern time by Garban Intercapital plc
and published on Reuters Page ISDAFIX®1. ISDAFIX is a registered service mark
of ISDA. Source: Reuters Limited.15. Moody's Aaa rates through December 6, 2001, are averages of Aaa utility and
Aaa industrial bond rates. As of December 7, 2001, these rates are averages of
Aaa industrial bonds only.16. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality;
Thursday quotations.17. Contract interest rates on commitments for fixed-rate first mortgages.
Source: Primary Mortgage Market Survey® data provided by Freddie Mac.

Note: Weekly and monthly figures on this release, as well as annual figures available on the Board's historical H.15 web site (see below), are averages of business days unless otherwise noted.

Current and historical H.15 data are available on the Federal Reserve Board's web site (www.federalreserve.gov/). For information about individual copies or subscriptions, contact Publications Services at the Federal Reserve Board (phone 202-452-3244, fax 202-728-5886).

Description of the Treasury Nominal and Inflation-Indexed Constant Maturity Series

Yields on Treasury nominal securities at “constant maturity” are interpolated by the U.S. Treasury from the daily yield curve for non-inflation-indexed Treasury securities. This curve, which relates the yield on a security to its time to maturity, is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. These market yields are calculated from composites of quotations obtained by the Federal Reserve Bank of New York. The constant maturity yield values are read from the yield curve at fixed maturities, currently 1, 3, and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a yield for a 10-year maturity, for example, even if no outstanding security has exactly 10 years remaining to maturity. Similarly, yields on inflation-indexed securities at “constant maturity” are interpolated from the daily yield curve for Treasury inflation protected securities in the over-the-counter market. The inflation-indexed constant maturity yields are read from this yield curve at fixed maturities, currently 5, 7, 10, and 20 years.